Tax on land profit: A new system next month
From July 1st onwards, a new mode of taxation and control of income tax on real estate profit will be put in place. The mechanism is provided for by the finance law and aims to strengthen the efficiency of the tax authorities and consolidate trust with taxpayers. But like any new measure, the new system arouses apprehension: the slowness of procedures, slowdown in transactions, and other issues.
These fears were swept away by officials at the level of the General Directorate of Taxes (DGI) for whom nothing justifies such fears. “There is nothing new that should let people say that this would risk slowing down real estate transactions, especially since this problem only concerns transfers made by individuals, which remains marginal compared to real estate transfers made by developers”, says a source at the DGI.
The new system provides for the prior opinion of the tax administration. Before carrying out transfer operations, taxpayers may, when concluding the sales agreement, request this opinion from the administration. They will thus have an idea of the duties they will have to pay or even if whether yes or no they will benefit from an exemption.
It will be the responsibility of the tax authorities to validate the conformity of the elements determining the net taxable profit and the declaration of real estate profits. For this, a request must be submitted electronically according to a model established by the administration, within 30 days of the date of the pre-sales agreement. The request must be accompanied by a series of documents: a presentation of the elements relating to the planned transfer operation, supporting documents relating to the determination of the tax or the exemption, as well as any other document or information supporting the request.
The administration’s response, which serves as a certificate of payment of tax or exemption, must be communicated to the applicant within 60 days following the date of receipt of the application. This answer remains valid for a 6-month period.
If the taxpayer proceeds to the payment of the tax on the basis of the elements of the certificate of liquidation, he will be exempted from the tax audit. Otherwise, the declaration made may be subject to rectification in terms of land profits.
Those who will not opt for the declaration on the basis of the elements of the liquidation certificate and the persons who will not seek the opinion of the tax authorities will be subject to another scheme. They will be required to pay, on a provisional basis, the difference between the amount of tax declared and 5% of the sale price. Only persons who carry out exempt transactions and those relating to the contribution of immovable property and/or real estate rights to the assets of a company or a collective undertaking for real estate investment (open-ended property fund) will be excluded.
Khadija MASMOUDI
